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Speech: Sowry - Labour's Back-to-the-70s Show

Speech: Sowry - Labour's Back-to-the-70s Show

Hon Roger Sowry MP National Party Industrial Relations Spokesman

Friday 9 July 2004

A speech by National Party Industrial Relations spokesman Roger Sowry to the 2004 National Party Annual Conference.

Labour's Back-to-the-70s Show

Madam President, National Party Leader Don Brash, Parliamentary colleagues, delegates:

Let me start today with a couple of quotes from Auckland business people on Labour's current industrial relations plans.

"Clearly, one business in the same industry cannot be compared equally with another - it may depend on their product mix, the size of the company, the financial backing, equipment, customer base etc. This will vary. Our 16 sites vary due to location, product mix etc. I also do not want to sit down at a negotiating table with my competitors."

"I am a small business owner who is currently trying to expand nationally while competing internationally. The onslaught of legislation is making this a much slower and costlier process than it should be. I can't provide the growth and new jobs wanted by the Government when I have compliance costs spilling out of my ears. It is destroying my company's competitiveness and I now see why so many other businesses relocate offshore in order to survive or to grow. Maybe we will go that way as well."

"Get rid of both the Bill and the Government that brings it in as soon as possible".

The industrial relations legislation that is about to be pushed through Parliament is a huge leap backwards.

It is a leap back to the 1970s: * Days of union domination in the workforce. * Days of pickets and protests. * Days of strikes.

It's worth remembering that during the 70s there were 3,839 complete strikes - more than one a day for every day of the decade. More than 800 working days were lost for every day of the decade.

So why the huge rush by this Labour Government to take New Zealand back to the industrial relations climate of the 70s?

What we are seeing is the biggest payoff to the union movement that this Labour Government has attempted since its election in 1999. All the other union-friendly legislation they have passed, including the shambolic Holidays Act and the original Employment Relation Act, pale into insignificance when compared with this new law.

Indeed, is it any surprise that we are seeing before the select committee a return of union leaders who New Zealanders had long forgotten?

Bill Andersen - still active with the Northern Drivers' Union. Dave Morgan - still active in the Seafarers' Union. Both are getting ready for a re-run of the disruption they were able to bring to the economy through the 70s.

Employers and businesses have not changed their opinion of these laws - they remain as implacably opposed to them as does National.

All that has changed is that Labour believes it can push through these laws before the next election and lock in union support, and the political, logistical and financial support that flows from the unions.

The current proposed legislation brings back all the objectionable pieces that Labour dropped out of the Employment Relations Bill after the winter of discontent in 2000, but goes much, much further by adding effective compulsory union domination of bargaining and giving unions enormous power to increase their membership.

It is effectively a return to compulsory union membership.

Labour is doing this in two ways.

First, Labour is essentially forcing workers to join a union. Under this law, employers will not be able to pass on the same wage increases to non-union members if the union deems that passing on a wage increase is done with the intention of undermining the collective agreement.

Only union members can enter into a collective agreement, and union submitters to the select committee have made it crystal clear that they oppose passing on and view employers passing on the same wage increase to union and non-union employees as undermining a union's position.

The message is simple. If you are not a union member, you will be prevented by law from receiving the same wage increase.

So, the carrot is for the trade unions and the stick is directed at employers. The Bill requires employers to continue fronting up to the table with unions in the bargaining process until all matters are resolved. This effectively gives unions the upper hand to continue drawing-out bargaining where an employer isn't giving in to wage and condition demands, and the employer is simply unable to walk away from the table.

How fair is that?

You don't have to be a rocket scientist to know what will happen to employers who won't buckle to union demands - they will be kept at the bargaining table - day, after day, after day ...

But there is more:

The Bill introduces MECAs (Multi Employment Collective Agreements). If employees who are members of a union request that their boss becomes part of a Multi Employment Collective Agreement, then the employer has to attend a meeting to discuss the issue with the union.

Once at the meeting, the employer cannot leave the bargaining table without all issues being resolved.

The unions have made it clear that they deem it to be bad faith if employers walk away from the table just because they don't want to be involved in a Multi Employment Collective Agreement.

So we can expect to see a huge growth in the number of these agreements.

Effectively, unions will be able to control sector-wide groupings, setting wages for the whole of an industry.

A New Plymouth engineering firm, Wells Instruments and Electrical, told the select committee considering the Bill that because of this clause, they did not register an interest in working on the major fuels upgrade contract at the New Zealand Refinery, even though they have all the expertise to carry out the work. They don't want to be dragged into a Multi Employer Collective Agreement.

Forget the gains we have made as a nation because individual businesses had flexibility on terms and conditions.

Forget the regional differences businesses face.

Forget the competitive nature of business. It's back to the 1970s, one level for all, and to hell with competition and innovation.

But there is more.

Once again, Labour has taken the opportunity to hike up the level of fines businesses face under this new proposal.

Breaches of good faith bargaining carry substantial increases in fines, with employers facing penalties of up to $10,000.

Much is made of the very nebulous concept "good faith". However, underpinning this Government's approach to industrial relations is the presumption that the employer fundamentally exploits the employee.

Labour believes that the only counter to this so-called natural tendency is for the Government and unions to step in to "protect" the employee and "control" the employer.

Individual choice and individual decisions have no place in their grand scheme.

There are no scarier words for a businessperson to hear than "I'm from the Government - I'm here to help - and I've bought the CTU with me".

Of course, to breach good faith you have to know what good faith is. This legislation redefines good faith, but not clearly. It has extended the definition into unknown territory and even the Employment Court judges who appeared before the select committee said they couldn't determine what the new definition meant.

It's a recipe for employers to find themselves in court.

It's a recipe for unions to stand over employers to achieve what they want.

It's a recipe for less production and more union domination of the workforce.

But wait, there is even more.

Some of the worst parts of the legislation are the clauses covering contracting out and sale of businesses. Employers will have to negotiate a clause with staff which sets out the procedures for the sale or contracting out of work within their business. This, of course, will include any restructuring.

The clause has to spell out when they will notify staff and the procedure they will use. This naturally will limit business owners' flexibility.

Let me give you an example:

An electrical contractor employs 6 electricians and decides to sell his business. According to the new law he will have to notify his staff when he is thinking of selling the business, thereby giving them the opportunity to leave and establish their own business in competition before any sale can take place.

Labour is also creating new provisions for a new type of worker, called a "vulnerable worker". The legislation defines these currently as being cleaners, caretakers, food and laundry service workers, and the new provision guarantees them the right of transfer to a new employer on the same terms and conditions.

New "vulnerable workers" can be added by the Minister of Labour at a whim.

Let me give you another example:

Your business uses a cleaning firm to clean the building, and they do a lousy job. You re-tender the contract and award it to a new company. Under this law, the new company is required to hire all the staff who were previously doing a lousy job of your cleaning under the same terms and conditions!

So much for a new contract.

Or you decide to buy a motel. In doing so, you must hire all the cleaning staff at the same terms and conditions, or pay them a redundancy that was negotiated by the previous owner.

The effect is that any purchaser of a business that employs Labour's newly defined "vulnerable workers" will reduce the goodwill paid for the business by the amount of contingent redundancy payments.

Paper Plus, who gave their submission on this loopy law to the select committee in Auckland, told us that this Bill has the potential to write between 10 and 15 million dollars off the value of their chain if shop workers were in future added to the vulnerable workers list.

And why wouldn't they be added?

Remember that a Minister can add new workers to the list at whim!

Don't be fooled by the fact that Paul Swain is fronting this bill - it is a Margaret Wilson creation through and through. She stands out even in a Cabinet absolutely packed with ministers who either don't understand or don't like employers.

This is a Bill that is all about increasing the membership of trade unions, increasing not only union power but, significantly, leading to an increase in trade union financing, and of course, increasing the funds that flow from the union movement to the Labour Party.

Opposition to the Bill has been strong - Business NZ, manufacturers, industry groups and employers all over New Zealand have made public comments and submissions opposing the bill.

In one of the most damming submissions I have heard, Business NZ stated:

"There is no bigger threat to employment, to economic growth, to enterprise and entrepreneurship that this bill."

A Don Brash-led National Government will repeal this labour legislation.

National will also sort out the holidays legislation, removing the clauses that stop employees and employers from working together to sort out the arrangement that best suits them.

National will not allow unions to have a stranglehold over the New Zealand economy.

Delegates, there is no bigger reason to kick out this Government than its labour relations legislation.

Ends

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